ROCM Rochester Medical Corp. (MM)

STEWARTVILLE, Minn., Nov. 15 /PRNewswire-FirstCall/ -- Rochester Medical Corporation (NASDAQ:ROCM) today announced operating results for its fourth quarter and year ending September 30, 2007. The Company reported 23% sales growth with record sales of $8,437,000 for the current quarter compared to $6,826,000 for the fourth quarter of last year, resulting from increases in both Rochester Medical Brand Sales and Private Label sales. It reported net income of $733,000 or $.06 per diluted share compared to a net income of $906,000 or $.08 per diluted share for the fourth quarter of last year. Net income excluding stock option expense and expense for amortization of intangibles, or "Non-GAAP Net Income" for the current quarter is $1,211,000 or $.10 per diluted share, compared to Non-GAAP Net Income of $1,237,000 or $.10 per diluted share for the fourth quarter of last year. To aid in comparison between the quarters the Company notes that fourth quarter 2006 included an $87,000 income tax expense while fourth quarter 2007 included a $480,000 income tax expense, resulting in a 30% increase in net income before income taxes for this fourth quarter as compared to last year's fourth quarter. For the fiscal year ending September 30, 2007 the Company reported record sales of $32,663,000 compared to sales of $21,666,000 for the previous fiscal year. It reported net income for the year of $34,050,000 or $2.77 per diluted share compared to a net income of $1,959,000 of $.17 per diluted share for the previous year. Non-GAAP net income for fiscal year 2007 was $4,966,000 or $.40 per diluted share compared to $1,948,000 or $.17 per diluted share for fiscal 2006. The 155% increase was primarily due to increased gross profit partially offset by higher costs and income taxes. The Company notes that in Fiscal 2007 it received approximately $31,000,000 (after taxes) in settlements for a lawsuit. Commenting on today's announcement, Rochester Medical CEO and President Anthony J. Conway said, "Once again at year end I am very pleased to say that this has been an excellent quarter and excellent year for the Company. Sales and operating income have strengthened very nicely, and we have been investing a portion of that increased income back into the Company in order to continue on a solid growth path for the future. Sales and Marketing expenses, for example, increased by over $3 million dollars in Fiscal 2007 as compared to Fiscal 2006. We are continuing the development and expansion of our Sales and Marketing team. I believe these investments make good strategic sense, and while they will impact net income somewhat in the short term, I am confident they will strengthen the Company's future performance." Rochester Medical has provided Non-GAAP Net Income in addition to earnings calculated in accordance with generally accepted accounting principles (GAAP) because management believes Non-GAAP Net Income provides a more consistent basis for comparisons that are not influenced by certain charges and non-cash expenses and are therefore helpful in understanding Rochester Medical's underlying operating results. Non-GAAP Net Income is not a measure of financial performance under GAAP, and should not be considered an alternative to net income or any other measure of performance or liquidity under GAAP. Non-GAAP Net Income is not comparable to information provided by other companies. Non-GAAP Net Income has limitations as an analytical tool and should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Reconciliations of Net Income and Non-GAAP Net Income are presented at the end of this press release. The Company will hold a quarterly conference call this afternoon to discuss its earnings report. The call will begin at 4:00 p.m. central standard time (5:00 p.m. eastern time). This call is being webcast by Thomson/CCBN and can be accessed at Rochester Medical's website at http://www.rocm.com/. To listen live to the conference call via telephone, call: Domestic: 1-800-295-3991, password 50354381 International: 617-614-3924, password 50354381 Replay will be available for seven days at http://www.rocm.com/ or via telephone at: Domestic: 1-888-286-8010, password 86563659 International: 617-801-6888, password 86563659 The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://www.fulldisclosure.com/, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (http://www.streetevents.com/). This press release contains forward-looking statements that involve risks and uncertainties, including the uncertainty of estimated revenues and profits, as well as the uncertainty of market acceptance of new product introductions, the uncertainty of gaining new strategic relationships or locating and capitalizing on strategic opportunities, the uncertainty of timing of private label sales revenues (particularly international customers), FDA and other regulatory review and response times, and other risk factors listed from time to time in the Company's SEC reports and filings, including, without limitation, the section entitled "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended September 30, 2006. Rochester Medical Corporation develops, manufactures, and markets disposable medical catheters and devices for urological and continence care applications. The Company markets under its own Rochester Medical(R) brand and under existing private label arrangements. For further information, please contact Anthony J. Conway, President and Chief Executive Officer of Rochester Medical Corporation at (507) 533-9600. More information about Rochester Medical is available on its website at http://www.rocm.com/. ROCHESTER MEDICAL CORPORATION Reconciliation of Reported GAAP Net Income to Non-GAAP Net Income For the three months and fiscal year ended September 30, 2007 Three months ended Fiscal year ended September 30, September 30, 2007 2006 2007 2006 GAAP Net Income as Reported $733,000 $906,000 $34,050,000 $1,959,000 Diluted EPS as Reported $0.06 $0.08 $2.77 $0.17 Adjustments for non-recurring unusual items: Settlement income after taxes (1) - (31,305,000) - Deferred revenue (2) - (39,000) (564,000) (157,000) Deferred tax benefit (3) - - - (672,000) Subtotal - (39,000) (31,869,000) (829,000) Adjustments for recurring non-cash expenses: Intangible Amortization (4) 167,000 188,000 668,000 218,000 FAS 123R Compensation Expense (5) 311,000 95,000 2,117,000 600,000 Subtotal 478,000 283,000 2,785,000 818,000 Non-GAAP Net Income $1,211,000 $1,150,000 $4,966,000 $1,948,000 Non-GAAP Diluted EPS $0.10 $0.10 $0.40 $0.17 Weighted Average Shares - Diluted 12,582,793 11,854,210 12,272,172 11,665,992 (1) Settlement income received November 20, 2006 from Premier, Inc of $5,155,000 and December 14, 2006 from CR Bard, Inc. of $33,450,000 after taxes. This adjustment is for amounts received net of taxes paid in connection with one-time settlement of certain litigation. These amounts were recorded in Other Income in the Statement of Operations for the fiscal year ended September 30, 2007. (2) Deferred revenue from a $1,000,000 fee paid by Coloplast A/S in June 2002 for marketing rights to our antibacterial Release NF foley catheter. These rights have been cancelled by mutual agreement, thus accelerating the recognition of the remaining amount as all conditions for revenue recognition have now been met. Also includes a $250,000 fee paid by Hollister for marketing rights to our hydrophilic intermittent catheter in September 2003. This adjustment relates to the realization of certain one-time revenue from marketing rights. The amounts were recorded in net sales in the Statement of Operations for the fiscal years ended September 30, 2007 and 2006. (3) Increase in the deferred tax asset which resulted in a tax benefit. This adjustment deducts net income for certain one-time tax benefits recorded in the three and twelve months ended September 30, 2006. (4) Amortization of the intangibles acquired in June 2006 asset acquisition from Coloplast AS and Mentor Corporation. This adjustment adds back amortization expense for the three and twelve months ended September 30, 2007 and 2006 related to certain intangibles. (5) Compensation expense mandated by SFAS 123R. This adjustment adds back the compensation expense recorded when stock options are granted to employees and directors for the three and twelve months ended September 30, 2007 and 2006. Condensed Balance Sheets (unaudited) September 30, September 30, 2007 2006 Assets Current Assets Cash and equivalents $6,671,356 $2,906,698 Marketable securities 30,465,244 - Accounts receivable 5,527,518 4,494,094 Inventories 7,698,889 4,642,578 Prepaid expenses and other assets 6,480 410,267 Deferred income tax asset 876,032 53,000 Total current assets 51,245,519 12,506,637 Property and equipment, net 9,679,035 8,239,246 Deferred income tax asset 571,721 1,178,000 Patents, net 257,353 271,171 Intangible assets, net 7,821,562 8,270,157 Goodwill 5,920,255 5,487,141 Total Assets $75,495,445 $35,952,352 Liabilities and Stockholders' Equity Current liabilities Accounts payable $1,091,874 $1,278,441 Accrued expenses 1,355,845 1,621,376 Short-term debt 1,849,463 1,681,361 Current maturities of capital leases - 42,084 Income taxes payable 623,093 105,559 Deferred revenue - 114,287 Total current liabilities 4,920,275 4,843,108 Long-term liabilities Long-term debt 6,066,246 7,540,737 Capital leases, less current portion - 21,946 Deferred revenue - 449,999 Total long-term liabilities 6,066,246 8,012,682 Stockholders' equity 64,508,924 23,096,562 Total Liabilities and Stockholders' Equity $75,495,445 $35,952,352 Summary Statements Of Operations (unaudited) (unaudited) Three months ended Twelve months ended September 30, September 30, 2007 2006 2007 2006 Sales $8,437,378 $6,826,473 $32,663,087 $21,665,837 Cost of sales 4,044,975 3,374,888 15,619,178 13,057,090 Gross profit 4,392,403 3,451,585 17,043,909 8,608,747 Gross profit % 52% 51% 52% 40% Costs and expense Marketing and selling 1,926,222 1,147,250 6,490,497 3,109,207 Research and development 232,725 189,982 943,225 759,639 General and administrative 1,540,034 989,277 6,742,665 3,344,662 Total operating expenses 3,698,981 2,326,509 14,176,387 7,213,508 Income from operations 693,422 1,125,076 2,867,522 1,395,239 Other income (expense) (Loss) on sale of investments - - - (103,532) Interest income 380,656 31,494 1,288,603 219,873 Interest expense (110,848) (163,450) (513,296) (224,848) Other income 250,000 - 38,855,000 - Net income before income taxes $1,213,230 $993,120 $42,497,829 $1,286,732 Income tax expense (benefit) 479,747 86,823 8,447,649 (672,176) Net income 733,483 906,297 34,050,180 1,958,908 Earnings per common share - Basic $0.06 $0.08 $2.97 $0.18 Earnings per common share - Diluted $0.06 $0.08 $2.77 $0.17 Weighted Average Shares: 11,680,364 11,079,604 11,449,646 11,068,102 Basic Weighted Average Shares: Diluted 12,582,793 11,854,210 12,272,172 11,665,992 DATASOURCE: Rochester Medical Corporation CONTACT: Anthony J. Conway, President and Chief Executive Officer of Rochester Medical Corporation, +1-507-533-9600 Web site: http://www.rocm.com/

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